Robinsons Retail Holdings, Inc.

Afternoon, everyone. Thank you for joining us for the first time of this year. I am Jeevan Dipali, my company's Investor Relations Officer. The speakers for this call are the following. Stanley Call, our President and CEO. My name is Kasima, our CFO. Christine Tuarez, the Managing Director of the Food Center and Food Formats. Johan Arceo, the Group General Manager of the Transfers Center. Celina Chua, the Group General Manager of the Department Store for Saras, Sol Academy and Spatial. Ted Sobono, the Group General Manager of the IYX segment and PECS. And Dondon Gao, the General Manager of Robinsons Appliances. Our Chairman, Rubina Tocamonte, is also the Vice-President. Left on the screen is the agenda for this afternoon's call. We will provide an overview of our financial performance and share key updates across the organization. As a reminder for the Q&A session, please use the Q&A function on your Zoom dashboard to type in your questions. Please limit initially to a maximum of three questions including follow-ups. We'll be back. into the Q&A box for additional questions. You may also use the raise hand function if you would like to ask questions live. With that, I will turn you over to Sandy.

Thank you, Dina. Good afternoon, everyone. Here are the highlights for results for the second quarter of 2025. Consolidated net sales rose from 5.9% to 50.7 billion. Blended safe for sales growth stood at 4.8%. Cross-profit grew by 6.6% to $12.3 billion. Event increased by 7.4% to $2.4 billion. In-core net earnings rose by 3.9% to $1.5 billion. And net income to parent declined by 13.3% to $1.5 billion. For the first half of 2025, consolidated net sales increased by 5.1% to $98.5 billion. Net net sales growth hitting at 3.9%. Gross profit rose by 6.4% to a budget 3.5 billion. EBIT increased by 5.2% to 4.3 billion. Foreign net earnings grew by 4.3% to 2.8 billion. Net income compared decreased by 66.5% to 2.8 billion due to the one-time gain from the PPI, our bank merger last year. Now a deeper look at our P&L. Consolidated net sales increased by 5.9% to $50.7 billion, bringing year-to-date sales to $98.5 billion. Stage 4 sales growth accelerated to 4.8% in the second quarter, given by election-related spending. Subdued inflation and earlier start of school year in June this year compared to July last year. First half, SSG stood at 3.5%. EBIT closed by 7.4%, $2.4 billion in the second quarter. and by 5.2% to $4.3 billion year-to-date, outpacing revenue growth. This was driven by improved category mix and continued vendor support. Net income attributes of both the pair declined by 13.2% to $1.5 billion in the second quarter, primarily due to higher losses from associates and increased interest rates due to the additional debt incurred to finance the buyback of PFI shares in RHI. Year-to-date net income-to-parent decline up to 2.3 billion, reflecting the high base from the substantial gain both in the first quarter of last year from the PPIR bank merger. And core earnings, including one-time items, increased by 3.9% to 1.5 billion in the second quarter and reached 2.8 billion in the first half, up by 4.3%, supported by the growth in EBIT. All segments posted positive growth with drug stores and department stores achieving double-digit gains from the quarter. The four staple businesses accounted for 79% of the total sales and 83% of total EBITDA. Meanwhile, our discretionary formats comprised 21% of total sales and the balance 17% of total EBITDA respectively. For the year-to-date period, ended June, 2025, we opened 18 stores, mostly under the drugstore banners, bringing our total store count to 2,171. This is comprised of 763 food-centered stores, 1,145 drugstores, 51 department stores, 228 DIY stores, and 284 specialty stores. In addition, we have 2,116 franchise PGP stores, and store openings are concentrated in the second half with more additional Additional stores expected to open in the coming months. Passing you over to Tin for the food segment.

Good afternoon.

Food segment sales grew by 4% with $30.1 billion in the second quarter, bringing year-to-date sales to $59.1 billion.

Same-store sales growth accelerated to 4.2% in the second quarter from 0.9% in the same period last year, driven by double-digit increase in basket sizes. Gross profit rose by 4.2% to 6.9 billion in the second quarter and by 4.7% to 13.5 billion year-to-date, outpacing revenue growth. This was supported by higher penetration of private label and imported products, as well as stronger vendor support. The expansion of gross profit offset the increase in personal costs, leading to an increase of 5.6% in half percent in the first half to 5 billion. Now, we turn you over to Joan for the drugstore segment. Good afternoon. The drugstore segment posted a double-digit growth in second quarter with sales reaching 9.5 million, supported by strong stream store sales growth of 8.2% and contributions from 63 new stores. Year-to-date sales rose 9.7% to 19 billion, driven by the strong performance in ethical OTC and milk categories. Gross profit rose by 16.3% in the second quarter and 15.7% in the first half, outpacing revenue growth. This was supported by higher house grant penetration and increased vendor support for in-store programs, resulting in a growth of 15.7% to 809 million in the second quarter and 11.3% to 1.6 billion in the first half. Turning over to Selina.

The department store segment delivered strong double-digit sales growth in the second quarter of the year to $4.3 billion, driven by the shift in the school calendar with classes starting in July this year from August last year, prompting earlier seasonal purchases. Second quarter SSSG accelerated to 8.1%. For the first half, net sales amounted to 7.6 billion, 9.6% increase year-on-year. Gross profit increased by 14.8% in the second quarter and 10.6% to 2.4 billion in the first half, driven by favorable category mix and strong vendor support. This translated to EBITDA growth of 13.4% to 282 million in the second quarter 9.8% to 428 million in the first half. Let me turn you over to Ted for the DIY assembly.

While DIY SSSG was slightly negative at minus 0.8% in the second quarter, the last two months showed a turnaround with positive SSSG. YTT SSSG stood at minus 1.4%, mainly due to supply chain disruptions in the first quarter. That impacted sport productivity and cost merchandise congestion. Gross profit declined by 2.7% to P957 million, mainly due to markdowns, partially offset by increased private label penetration and the introduction of new high-margin items. YTD gross profits stood at P1.9 million. The decline in gross profit along with higher operating expenses, particularly from then, and additional costs at the distribution center, resulted in decrease in EBITDA to 601 million pesos. Turning over to Mr. Don Don Not.

Schedule B segment sales rose by 3.10% to 3.8 billion in second quarter of the year. bringing year-to-date up by 4.4% to 7.1 billion. Growth was fueled by double-digit increases in toys, mass merchandise, and lifestyle sneakers, with all format hosting games except appliances and electronics. EBITDA declined to 298 million in first half of the year, primarily due to the underperformance of appliances and electronics, which were impacted by the store closures and clearance activities. However, performance includes quarter on quarter. I'll turn it over to my news.

Thank you. Moving on to our working capital, RHI's cash conversion cycle rose to 25.2 days, driven by higher investment days of 80.9, as cash for indent products increased to meet strong demand. In terms of balance sheet, our net debt increased to 28.8 billion RBI, Due to the additional loans used to purchase the GFI shares in our time in May 2025, our balance sheet remains healthy with a net debt to equity ratio of only 0.37x. ROA and ROE normalized between 0.5% and 7.2% respectively due to the absence of the one-time gain from the DPI or bond merger in due time. Lastly, organic paychecks amounted to $1.7 billion in the first half of last year, who accounted for the biggest share at 58%, followed by the drugstore at 16%. So now back to Stanley.

Now I'd like to update you on some of our minority investments, namely OC and full-time growth strategies. All sales store count in the Philippines more than doubled to 560 from 270 stores last year. This led to sales increasing by 3.3x to $212 million. Operations were also supported by four distribution centers. GoTimes customer base grew to 6.8 million from 3.6 million, reinforcing its position as one of the fastest growing digital banks in the Philippines. Construction count also sustained its momentum as the bond continues to gain scale. Grocery's total platform value, or the value of all its business line, increased 20% from last year to $450 million, giving the continued growth in coverage. Let me share some key corporate developments across the business. Following our buyback of PFI shares, PFI nominees, Mr. Scott Price and Mr. Curtis Few have formally resigned from the RHI Board. Mr. Lance Gokumui returned as Director of RHI-Effected July 25, 2025. He is also appointed as Chairman of the Remuneration, Domination, and Succession Planning Committees. On July 25, the RHI Board approved the acquisition of 100% of Premium Values Corporation for $146 million. This is equivalent to 1x of PBC's 2024 audited book value. Premium Bikes is a nationwide motorcycle retailer with 214 stores and has shown consistent profitability in recent years, making it a strong fit for integration with Roblesons Retail. This acquisition is expected to be valuable and remains active for us enabling us to participate in the under-penetrated and fast-flowing motorcycle category that is also profitable. For full year 2024, PBC boasted net sales of 4.2 billion, 15% year-on-year, and recorded EBITDA of 324 million, 37% higher year-on-year, driven by strong retail demand. The transaction is subject to customary closing conditions. including regulatory clearance from the Philippine Competition Commission. To ensure the integrity of the transaction, we engaged a third-party financial consultant to provide a fairness opinion and value valuation report and secured approval and endorsement from the related party transaction committee prior to final board approval. The board has also approved the retirement of 158.4 million treasury shares from the buyback program. The retirement of treasury shares excludes the PFI shares in RHI acquired in May 2025. Upon retirement, this will reduce the company's authorized capital stock, the number of issued and treasury shares, as well as the additional paid-in capital. This move is expected to beef up RHI's unappropriated earnings, and I think the company's ability to declare dividends its reinvestment in growth. This will also remove concerns on the issuance given the sizable amount of treasury shares that we currently sell. Robustness Retail is recognized as one of Fortune's Southeast Asia 500 companies of 2025. We were one of only 40 Philippine companies included in the list of Southeast Asia's largest 500 companies per revenue. The ranking was based on 2024 financial results, which were compared with 2020's revenue and profit figures. In the retail sector, we ranked 8 out of 36 key retailers from across the region. In May, Shopwise held its second bike fest at Ayala Bermosa Sports Hub, throwing nearly 3,000 cyclists and fitness enthusiasts. On June 22, South 14th Run for Wellness gathered over 9,000 runners at repeated demand. The largest were not for a fun run at the venue. Pricing 1 million for the UP Health Service and UP Public Safety and Security Office for facility and service improvements. On July 6th, Roberson Supermarket's 17th Fit and Fun Wellness Body Run brought together 6,500 runners at Bridgetown. with proceeds supporting World Vision, Foreign Philippines, and Scholars of Sustenance. Attorney Janet Serrano is now the Corporate Secretary of RHI, taking over the role from Attorney Gilbert Villado, who temporarily assumed the position. Attorney Gilbert will continue to serve as General Counsel and Compliant Officer of RHI. Gina Dipaling will officially step down from her role as Vice President for Corporate Planning Investor Relations Officer and Head of Sustainability, effective July 31, 2025. Gina will continue to serve as Advisor for Corporate Planning. And Angela Torres will assume the role of Vice President for Corporate Planning, Investor Relations Officer and Head of Sustainability. This is our guidance for full year 2025. We are looking at the net storage distance of 130 to 170, with bulk of new stores coming from the food and drug store segment. Meanwhile, we are aiming for a blended SSSG of 2 to 4%. On gross margins, we are guiding for 20 to 30 bps expansion per year. And finally, we are earmarking 5 to 7 billion for organic capital expenditures. This ends our presentation for the first half of the 25 results. We will now open the floor for Q&A for the Q&A sessions.

Good afternoon. So for Q&A, we actually received a few questions earlier today via email. We'll go through those questions first before we entertain questions from the floor. So the first set of questions would be from Renz Alvarado. He's from CLSA. Why did RMHI acquire Premium Bikes? And apart from the 1x price to book valuation, what was the valuation of the company in terms of other metrics such as PE or EBITDA, if that's a reasonable?

Premium Bikes is also a retail business. It's being consolidated under RH as a result of that. In terms of valuation, PE-wise, it's around two times greater than that. It's around one time.

Okay. The second question, friends, is looking at the numbers. The company does not appear to have any funding gaps on cash flows unless there is a big potential acquisition. So when the company retired, the remaining treasury shares specifically from the DFI retail buyback, if not, why?

For now, not yet. The board only approved for the 158th area, retirement.

Okay, and then Nadine of Great Des Moines, she also sent a few questions via email a while ago. So this one is still related to the DFI buyback. How is the buyback funded via additional debt? What is the interest rate and expected paydown for the debt?

The buyback is funded by borrowings and the interest rate is 5.5%. Expected paydown for the debt. Right now, we're still paying down the debt. We encourage the purchase of EBI shares and we plan to pay the full amount by 2027. So after that, we'll be paying down the debt for the buyer.

Okay. And then Nadine has a few questions that she's also sent via email. This one is, you said the questions would be for premium bikes. What is the company's historical sales growth in the last five years? How is this compared to industry? And what is the medium-term growth target of the company?

Since 2021, the failure is around 10%. But this year, the growth is really high, doubled with the floor to 30%. Yeah.

Then historically, during the same time frame, industry is growing about 7%. So we're growing above industry. Sorry, the company is growing above industry in that time frame. The question of Nadine is, What is the company's market share? And are there any competitive advantages? Who are the top players in the industry? And how intense would be promotions?

The top player is Motor Trade. They have 800 plus stores. We have only 200 plus stores. So you can... But there's no data that we... Unlike the car sales, I think... In terms of volume, I think we're like 3%. Okay, just need a 4%.

It's quite a fragmented industry for motor cycles. Next question from Aline, still from her email. What is the long-term plan or target contribution to the company? What is expected annual topics for premium bikes?

Okay, that's a small question. It's just like 100 to 200 million per year, unless we accept it.

Attribution to P&L, the bottom line may be about, it's quite small, maybe 1% to 2% impact only. So it's really small. And then her last question is, what are the synergies expected for the group? How does this change the scope of M&A opportunities for the company?

Synergy is really with DPI because of the other side of financing and also with our department store and DIY business for the accessories such as helmets, apparel, some business.

Okay. Now I'll go to the questions sent via the Q&A facility in Zoom. Our first set of questions will be from Teresa of Macquarie. Next few questions are on supermarkets, excluding Uncle John's. So what was SSSG in 2Q25 and first half 25?

For Uncle John's, the supermarket. It's 4.1% for 2Q25. 4.8% for 2Q.

What's GPM in 2Q 2025 for Supermarkets X Uncle John's and how did it change year-on-year?

21.9. 21.9%.

by about 20 basis points year-on-year and then limit the margin for 2Q supermarkets and the year-on-year progression.

8.6%. 8.6, 10 minutes higher.

Okay, thank you. And then our last question on food. What is private label contribution to sales in the first half?

Excluding Uncle John's, that's 7.8%. That's higher by 53.5%, which was last year.

Okay. Next set of questions, still from Teresa on Uncle John's. Same-store sales growth in 2Q and 1H25M.

For people, it's minus three and a half. And for half one of 20.5, it's minus three equals three. And RTE is 40% over sales.

So that's her follow-up question is on RTE. Thank you for answering that. And then still a few questions from Teresa. What drove the strong same-store sales for drugstores in 2019?

She was driven by improved availability of our core assortment, which led to the strong sale of our ethical milk and OPC categories. Also, the election spent last May helped. In terms of the SSS chain list, it's trending at around 5%.

Thank you. Okay. Nadine has a few questions in the Zoom Q&A box. So for food segment, what is the emphasis for supermarkets and CVS respectively? I think we answered this already. Did we see an increase in basket size across all food formats? Any divergence in SSSG trends?

Across all formats, we're seeing an increase in basket size.

Okay. What is the percent year-on-year growth of supplier support for food, and second, have you observed stable or increasing intensity of supplier support for food?

I saw maybe you were not great on the wiretips.

Okay. Next set of questions will be from Dawn. Can you help us understand more about the motorbike retail landscape? and premium bikes positioning and competitive advantage compared to other players. So the market in terms of volume is growing about 7%. We're growing faster than market. In terms of volume, we did Sorry, premium bikes did 14% in 2024. So that's double the growth in terms of volume. In terms of volume market share, it's about 3%, 4%. Still pretty small. The biggest would be motor trade with about 800 stores. And I think it's about 30% volume share. So it's quite a fragmented market. but the growth trajectory of premium bikes is faster than market. Competitive advantage perhaps would be that financing partnership with BPI. So that's helped the business tremendously. Okay, we have a few people who've raised their hands online. Okay, you can put it down, sorry. Still a few questions from Tone, follow-up. What is interest expense on lease liabilities and depreciation for right-of-use assets in the second quarter?

Okay. The amortization right-of-use assets in Q2 is 1D. The interest expense on lease liabilities is 400. Okay.

Thank you. Okay. We have a few questions from Denise Joaquin of QualFinancial. How much for the respective interest rates attributable to BPI-related financing and BFI share buyback, just in the second quarter?

Yeah, for the second quarter for BPI, it's around 125, 130. And then BFI share buyback is just new. The low taken there is 15.7% and 5.5% because only operate once in Q2. Yeah, roughly once a month.

All right, thank you. Next would be from Clark Gaba. Good afternoon. OSAVE appears to have grown about 11% in same-store sales while doubling the stores. So where do you see them gaining market share from?

Mostly from the mom-and-pop stores. and also some of the meaning lines.

Okay, thank you. Next would be from Rainier Yu. Thank you for the presentation. Three questions. Number one, can you elaborate more on the contribution of the minority investments into the company's equity losses? Number two, is it safe to say that the DIY segment has bottomed out? And number three, any new brands introduced in the DIY segment?

I'll answer for DIY. Yes, it's safe to say that we're starting to recover starting May. Our running SSSG is already positive. For the new plans we introduced, these are more of our private tables and exclusive plans from our partners in the U.S.

Okay, thank you.

And the minority in rest and equity losses? BALCOGIS is coming from OC, HBCL. They are ramping up in terms of their expansion.

Next question will be from Q. Can you elaborate on the higher losses? What are the reasons? What is your expectation in the coming quarters.

Yeah, as mentioned, the loss is coming from HD retail because of the ramp-up in expansion. Losses for this year will be slightly higher than last year.

Okay, thank you. Okay, a few questions from Paolo of Regis. Can you provide color on how the food segment and other segments are performing for the months of June and July, are we seeing strong SSSG momentum continuing from 2nd to 4th?

I think to me, July was a good one. It's a good one. It's a good one. It's a good one. It's a good one. It's a good one. It's a good one.

Okay, next would be from Matthew Rojas. Good afternoon. Are you seeing any competition on hard disk calendars? At the same time, is there more consumption for private labels or are we still seeing down training?

For our private label, I think we increased the share of our private label. It used to be 6.5%, 6.5%. Last year, now it's around 7.8%. So it's higher. Are we seeing, you know, maybe some categories you are?

Okay. Thank you. Rainier has a few follow-up questions. Can you share SSSG trends across the different formats in full, excluding octodons?

Robinson Supermarket is for the first half. For all business supermarkets, it's 4.4%. Marketplace, it's 3.8%. Shopwise, 2.2%. But RE is at 4.5%. I think among the food formats, it's only a part that's negative. Most of the Pogo. Mainly because of Pogo.

Thank you. Next few questions would be from Dan Bryan. He has three questions. The first one, what were the top three items sold in your department store business? And top three items sold in specialty. Number two, is the SSSG declined in hardware due to ticket size or transaction size? And number three, could you refresh us on the nature of the year-on-year increase in short-term loans payable?

For the department store, our top items are back-to-school related items. Specialty.

Specialty. Around 60% of specialty is appliances, so she'll be talking about appliances.

AC. AC. For DIY, it's the transaction account.

Yeah, the loans added. The increasing loans just due to the BFI transaction.

Okay. This one is curious. Can you share SSB Then so far in July, for other formats, like Supermarket, are you seeing strong momentum from Tokyo? Thank you for the question. Next set of questions would be from Olivier Merlache. Could you kindly comment about the profitability or losses of Fullsave in the first quarter? Do you want to speak to? And on a different topic, could you also confirm the number of shares outstanding a massive community. Net of treasury?

For the shares outstanding net of treasury, it's 1.1 billion, 102 million shares. I think it's best for you to ask...

Yes.

Yes. Hi, good. Good afternoon.

Hi, good afternoon. Can you?

Yes. Yes. Yes.

Hi. Hi. Can you hear me?

Good afternoon. Yes. Jonas, yeah. The question is, could you kindly comment about the profitability or losses of OSAVE in first quarter and second quarter?

All right, fantastic. So we finished the year, or the first half of the year, slightly negative at an EBDA of... negative EBITDA of 0.23%, which is substantially better than we were budgeting for the year. So far, in terms of profitability, we are performing much better than anticipated in 2025.

Okay, thank you. All right. Okay, this one would be from Dawn. Follow-up questions. This is on Star Expansion. So for Grocery, retail and drugstores, do you still see a lot of room for network expansion, considering that you already have a large network for both formats? If so, where specifically do you want to prioritize your expansion plans? And also, can you share market share for these two formats?

Yes, there's still room for expansion for both formats for grocery and meat Media and drug stores. Especially in the science and in the malware, we have limited presence. Find a chair. Thank you.

No, we don't have statistics.

No, we don't have statistics, but according to your monitor, it's around 10. But for food, it's about mid-teens, mid-to-high teens, and then for drugstores, it's 10 or less mid-teens for a drugstore.

Yes.

Okay. And we have follow-up questions from Nadine of J.D. Margaret. For department stores, how is 8.1% same-store sales growth broken down into basket ties and transaction count? Which categories grew? SSSG? How is SSSG trending in the third quarter so far, given the shift in school calendars?

Okay, for transaction count, the transaction count for the department store grew by 15.1%. However, the basket size fell by 7%. The categories driving the sales are children's shoes and bags because of back to school. And for the third quarter so far in July, we're affected by the weather right now and also the shift in the back to school season this year.

Thank you. Okay. For premium bikes, this is still from Nadine. Are you under exclusive distribution agreement with motorcycle brands? No. Answer is no. And then what's average margin for two wheels?

It's a slightly lower than the GP margin of average.

Okay. And then from Rainier, is the company's core earnings with management guidance and what are the efforts to regain or recapture margins from higher minimum wage and red flags?

I think so far our EBITDA margin is holding up. Our EBITDA margin so far is holding up. Sam, which last one? Okay. Okay.

Nadine has follow-up questions. What are your eventual plans for the DFI fair swap back? I think we answered that earlier. No plans for now, still in treasury. And then how will you pay down short-term debt related to the buyback? How will it be funded?

Okay. Usually, we're able to pay around, you know, five years.

Okay. Correct. Okay. Follow-up from Regis. Store count for CVS has been decreasing in the past few years. Are there still be Will there still be closures for CVS this year? What are the challenges that this format is facing?

There will be a net addition this year. I think we're looking at ending the year with 400 point closures.

Yeah, so for sure we'll be opening more stores this year than in the closing. Thank you.

Just one further question. This is on grocery. How much did it contribute to supermarket sales in the first half?

Less than 10%. Less than 10%. Okay.

Next would be from Jerry Alfonso. Following your recent acquisition of premium bikes, are there any additional M&A plans or pursuits? under consideration for approaching execution within the year.

We're always talking with somebody. We just don't know when to close.

And perhaps just to clarify, the transaction still has to go through regulatory approval for the KRPCC. So the transaction is not yet closed. Okay. Yeah. A few questions from Renz of CLSA. On wage hikes, could you remind us how much percent of your quotes and effects are from salaries and wages?

Renz, any others? London, around 4% to 5% for rent and 6% to 7% for... Percent of cost.

Percent of sales.

Percent of sales. Okay.

This one is from Theo. What is the payback period, perhaps a typical payback period for newly opened stores?

On average, four years.

Okay. And then Teresa, for supermarkets, when the sales affects Uncle John's in the first half, 56 billion pesos. Okay, 56 billion pesos. And then finally, Paolo from Regis, can you break down the net additions for the different formats in food?

And can you tell me about the net additions?

Net additions?

For the food? Okay. Then Robin to C-Synac is around 20. And then Robin to Supermarket around 12. And for Justice Boyd, TMP1. TMP1.1. TMP1. Marketplace.

Sorry. Okay. And then Nadine from J.P. Morgan, can you please repeat the implied P.E.? ? and EV EBITDA of the prison bikes acquisition.

EV is around 1.8 times the visa. EV EBITDA is 0.97 times the visa.

Okay, and then we have a few more questions. This one is from Brooke Tone. Would RHI benefit from the trade deal with the U.S.? Any improvement in bargaining power with overseas suppliers? And if so, would you be able to quantify the upside to your Rosmar veins?

What was that, Mike? It might be very minimal. I guess the benefit would be more and more important products because of the zero tariff.

Okay. Thank you. All right. There are no more questions coming in. So at this point, we can now end this call, sir.

If there are no further questions, we will end the call. Thank you, everyone, for your time, and we look forward to seeing you in the next conference call.